Private Explorers Lead U.S. Rig Count to Longest Rally in Yearsby
Closely held E&Ps account for nearly half of U.S. working rigs
Public companies grew rigs 11% vs private explorers’ 77% climb
The longest rally for U.S. oil rigs in years has come largely on the backs of explorers outside the public market, according to Bloomberg Intelligence.
Exploration and production companies that are privately owned boosted their share of the total U.S. working rig count to 44 percent at the start of August, William Foiles and Andrew Cosgrove, analysts at Bloomberg Intelligence, wrote Monday in a report. That compares to 29 percent in mid-February.
"Closely held E&Ps have been driving the recovery in U.S. rig counts," Foiles and Cosgrove wrote. "Publicly traded companies will likely begin to add more rigs in the closing months of the year as balance sheets become more healthy and they seek to boost production."
West Texas Intermediate, the U.S. benchmark for crude, is up 74 percent from the lowest closing price this year of $26.21 a barrel in February. The total U.S. rig count has climbed 19 percent since bottoming out at the end of May, according to Baker Hughes Inc.
The 77 percent growth in operating rigs by privately owned companies since the low point outpaced their publicly held competitors by seven-fold. And this year’s rate of increase is twice as big as in 2015, when private explorers added 80 rigs during the summer months before giving back those gains by November, Cosgrove said in an interview. There were no comparable rallies for the publicly held companies.
"The public count bottomed in early June and then never really gained any steam," Cosgrove said. "It was kind of a bleed basically throughout the entire year. It never really gained too much traction."